What is the geographic scope of the Chocolate Bash Marketing Fund?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
If CB Franchising has established a Marketing Fund:
- (a) Separate Account. CB Franchising shall hold the Marketing Fund Contributions from all franchisees in one or more bank accounts separate from CB Franchising's other accounts.
- (b) Use. CB Franchising shall use the Marketing Fund only for marketing, advertising, and public relations materials, programs and campaigns (including at local, regional, national, and/or international level), and related overhead. The foregoing includes such activities and expenses as CB Franchising reasonably determines, and may include, without limitation: development and placement of advertising and promotions; sponsorships; contests and sweepstakes; development of décor, trade dress, Marks, and/or branding; development and maintenance of brand websites; social media; internet activities; e-commerce programs; search engine optimization; market research; public relations, media or agency costs; trade shows and other events; printing and mailing; and administrative and overhead expenses related to the Marketing Fund (including the compensation of CB Franchising's employees working on marketing and for accounting, bookkeeping, reporting, legal and other expenses related to the Marketing Fund).
- (c) Discretion. Franchisee agrees that expenditures from the Marketing Fund need not be proportionate to contributions made by Franchisee or provide any direct or indirect benefit to Franchisee. The Marketing Fund will be spent at CB Franchising's sole discretion, and CB Franchising has no fiduciary duty with regard to the Marketing Fund.
- (d) Contribution by Other Outlets. CB Franchising is not obligated to (i) have all other Chocolate Bash businesses (whether owned by other franchisees or by CB Franchising or its
affiliates) contribute to the Marketing Fund, or (ii) have other Chocolate Bash businesses that do contribute to the Marketing Fund contribute the same amount or at the same rate as Franchisee.
- (e) Surplus or Deficit. CB Franchising may accumulate funds in the Marketing Fund and carry the balance over to subsequent years. If the Marketing Fund operates at a deficit or requires additional funds at any time, CB Franchising may loan such funds to the Marketing Fund on reasonable terms.
- (f) Financial Statement. CB Franchising will prepare an unaudited annual financial statement of the Marketing Fund within 120 days of the close of CB Franchising's fiscal year and will provide the financial statement to Franchisee upon request.
- 9.4 Marketing Cooperatives. CB Franchising may establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative for the geographic area encompassing the Location has been established at the time Franchisee commences operations hereunder, Franchisee shall immediately become a member of such Market Cooperative. If a Market Cooperative for the geographic area encompassing the Location is established during the term of this Agreement, Franchisee shall become a member of such Market Cooperative within 30 days. CB Franchising shall not require Franchisee to be a member of more than one Market Cooperative. If CB Franchising establishes a Market Cooperative:
- (a) Governance. Each Market Cooperative will be organized and governed in a form and manner, and shall commence operations on a date, determined by CB Franchising.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, the Marketing Fund can be used at the local, regional, national, and/or international level. CB Franchising has the discretion to use the Marketing Fund for marketing, advertising, and public relations materials, programs, and campaigns. This includes activities such as developing advertising and promotions, sponsorships, social media, internet activities, market research, and trade shows.
This means that as a Chocolate Bash franchisee, you may contribute to a marketing fund that supports advertising and promotional efforts beyond your immediate location. While this could increase brand awareness and potentially drive more customers to your location, the FDD also states that expenditures from the Marketing Fund do not need to directly benefit each franchisee proportionately to their contributions.
Chocolate Bash also has the option to establish market advertising and promotional cooperative funds ("Market Cooperative") in any geographical areas. If a Market Cooperative is established for the area encompassing the franchisee's location, the franchisee must become a member. The activities of each Market Cooperative are decided by a majority vote of its members, but Chocolate Bash is entitled to attend and participate in any meeting of a Market Cooperative. Each Market Cooperative is devoted to administering regional advertising and marketing programs and developing standardized promotional materials for use by the members in local advertising and promotion.